Katharine McPhee voted off by RCA

The adorable songbird is the latest "AI" finalist to be ejected from the BMG nest - following Season 2's Ruben Studdard and Season 5's Taylor Hicks.

McPhee's first CD entered the charts at No. 2 in February 2007, but failed to go gold. Her defenders grouse that RCA didn't give her the time or promotion she needed.

"Winning 'American Idol' is no longer a guarantee that you're going to make it," says one industry source. "Katharine was hot for a few months. But audiences are fickle."

But one top BMG exec insists: "It's preposterous to say this franchise has lost its luster. It's the envy of the music industry. We've sold over 50 million albums by 'AI' artists since the show started.

"We put millions behind Katharine. Many of us at the label still love her songs. But we're in the major leagues. We didn't think she could break into the mainstream. We would rather be honest." (McPhee is talking with another label and is due to star in the movie "I Know What Boys Like.")

The exec noted that Studdard (above, right) put out three albums, "but there comes a time when we have to recognize the market for adult-oriented albums is tough. We allowed him to be a free agent, to make the record he wanted to make.

"The same thing with Taylor Hicks (above, left). We didn't want to shove any songs down his throat. We wanted to make an album in the style he was comfortable with. We mutually agreed that he'd work on an album [on his own], we'd listen, and we'd see where we go from there. There's no acrimony."

The BMG group still counts eight "AI" contenders on its roster, including Carrie Underwood and Chris Daughtry (both of whom delivered top 10 albums in 2007), Blake Lewis (with one album), Fantasia (with three), Jordin Sparks (working on her second), and Clay Aiken and Kelly Clarkson (both working on their fourth albums).

And though she was signed nearly three years ago, execs at BMG's Arista label are still looking forward to Jennifer Hudson's album, due out in May or June.

"We understood that her appearance in 'Dreamgirls' would only make her a bigger star," says the exec. (Indeed, it won her an Oscar.) "We are always willing to be patient with people who have the goods."